Petrojam general manager, Winston Watson, insists that the price of diesel is driven by market demand, and not artificially controlled by his company.

The head of Jamaica’s sole oil refinery was yesterday responding to public demand for a reduction in the ex-refinery cost of diesel, as well as a removal of the ad valorem tax on the fuel.

“There is supply and demand dynamics, the price is driven by market relationship,” Watson told Auto.

Last week truck drivers called for a rollback in diesel prices arguing that the fuel was the lowest grade in the production process and as such should not be priced higher than octane-90 gasoline.

“Jamaica must be one of the only places in the world where diesel price is higher than gasoline,” truckers contended. The truckers added that pricing diesel higher than gasoline was, in fact, counterproductive since the haulage and transportation sectors, critical to economic growth, were driven by diesel.

For months the local ex-refinery price of diesel fuel has been above that of octane-90 gasoline, which is a more refined fuel.

But Watson, yesterday, sought to clarify what he says is a widespread misconception.

“Fuel pricing is not based on the production process,” he contended, emphasising that demand for diesel both locally and overseas was pushing up the price of the fuel.

Watson further argued that the price of diesel could actually decrease over coming months, adding however that “the dynamics have changed and it is now higher than gasoline.”

“It may very well reduce later on,” the Petrojam general manager said.

At the same time, Watson said he could not speak to a removal of the ad valorem tax on diesel.

“I can’t respond to taxes, that is a Government decision,” he said.

In a September 11 full-page advertorial in the Observer, under the heading ‘Gas price explained’, Petrojam defended its pricing policy saying that its calculations were in tandem with the international oil market.

In the advertorial, Petrojam sought to clarify the relationship between crude-oil price movement and the pricing of local finished products.

Said the ad: Crude oil is the raw material used in the manufacture of refined petroleum fuels. Petrojam delivers petroleum to the domestic market. The products supplied to the market are either produced as output from our refining process using crude oil as raw material or imported directly. Very often, movement in crude oil prices are misinterpreted as product price movements.

The advertisement also said that Petrojam’s ex-refinery price is indexed to the US Gulf Reference price for finished products such as gasoline and diesel. “Movement in our prices have generally been in keeping with movement in these reference prices,” said the advertorial.